SEC to Consider IFRS Statement

In
its first formal action on IFRS since Chairman Mary Schapiro took
office, the SEC plans to consider its policy on the use of IFRS by
U.S. issuers at an open meeting Wednesday.

The
SEC, under former Chairman Christopher Cox, published in November
2008 a proposed road
map for the adoption of IFRS. The proposal outlined a plan that
would require the largest U.S. companies to file IFRS reports for
fiscal years beginning on or after Dec. 15, 2014, provided certain
milestones (including—but not limited to—improvements in accounting
standards) had been met by 2011.

During
her confirmation hearings, Schapiro appeared to be skeptical of the
proposed road map when she highlighted concerns about a lack of
consistency in the application of IFRS, the cost for U.S. companies
to switch to IFRS from U.S. GAAP, and the independence of the
International Accounting Standards Board (see “SEC
Nominee Pledges to Revitalize Enforcement, Has Concerns About IFRS”).

Once
in office, she first spoke publicly on the issue in September when
she and recently appointed Chief Accountant James Kroeker said
separately that they would make the road map proposal a priority in
the fall. But fall passed without any guidance from the SEC.

Many
issuers have been anxiously awaiting a “date certain” for the
adoption of IFRS. However, it’s uncertain whether the statement the
SEC will consider Wednesday will include a specific date. The 2008
road map proposal did not call for the SEC to make a final decision
on whether to adopt IFRS until 2011. Many stakeholders who commented
on the proposal said the road map would not give them enough time to
transition to the new standards if the SEC does not reach a decision
until 2011. Many also cited concern over the cost of moving to the
new standard.

Another
key issue is the progress of the convergence project undertaken by
FASB and the IASB under which the two standard-setting boards have
agreed to merge their separate sets of standards into a single high
quality set. Under the agreement, the boards are taking the best
approach from either U.S. GAAP or IFRS or jointly developing
entirely new standards where the current standards of neither body
are deemed to be of sufficient quality.

FASB
and the IASB have been working on this convergence process since
2002 with many major joint standard-setting projects scheduled for
completion by June 2011.

The
June 2011 completion date also corresponds with a September request
by the leaders of the G-20 nations for “international accounting
bodies to redouble their efforts to achieve a single set of
high-quality, global accounting standards within the context of
their independent standard setting process and complete their
convergence project by June 2011.”

The
September statement
by the G-20 leaders in Pittsburgh followed previous statements
calling for a single set of global accounting standards and other
accounting changes at summits held in Washington
in November 2008 and in London in April 2009.

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